COLTON – A unanimous City Council vote Monday began a process that will merge the city’s seven Redevelopment Agency project area’s into one.

Once complete, the merger will enable the city to better leverage agency dollars and allow for greater flexibility in the type of redevelopment projects funded, officials say.

“It’s going to help develop areas that don’t have much money for project improvements,” said Councilman David Toro. “We can build the city as a whole and not just one area at a time. It will make the city holistic in how we build projects.”

Currently, tax increment generated in each project area can only be used to fund projects within that area. The agency collects tax increment money when property tax revenues increase due to increases in the assessed value of properties within a project area, city reports say.

Once the merger is complete, the agency will be able to use tax increment dollars for any redevelopment project within the zone, rather than having funds restricted to the respective zone its generated in, officials say.

“When the project areas are merged we can use bigger pools of money in and around the city versus just keeping it in one area,” Councilman Richard DeLaRosa said.

The council awarded a $424,537 contract to Tustin-based Urban Futures Inc., to perform the work needed to facilitate the merger.

City Manager Rod Foster said the merger will capture over $120 million in tax increment money that would be lost over the next 30 years. Over that period, several project areas are expected to hit tax increment caps before they expire that will prevent them from continuing to collect revenue, city reports say.

Also on Monday, the city turned over about $3.8 million in agency money to the state, which has ordered that redevelopment agencies across the state pay various sums to amass over $2 billion to help close a deficit over $18 billion.

Foster said he felt it was “exceedingly ironic” that the council voted on policy he says will help the agency do a better job on the same day it lost millions of dollars that could have benefited the city directly.

“We could have used that money for economic development and to build senior housing,” Foster said. “But we’re going to move forward with redevelopment goals because we understand that we have work to do, irrespective of what the state does with their budget.”

By July 2011, an ordinance should be place making the merger official, Foster said.

The project areas comprise a significant portion of the city. Since five of the seven council members own property in or within 500 feet of a project zone voting on a contract that will result in merging them presents a conflict of interest.

At least four members must be present to vote on an issue. Members with a conflict, consisting of Deirdre Bennett, Mayor Kelly Chastain, DeLaRosa, Susan Oliva and Vincent Yzaguirre, drew straws to determine which two would take part in the voting process.

DeLaRosa and Oliva drew the short straws and joined Councilmen Alex Perez and Toro, who didn’t have a conflict.